Home sales in the United States of America are witnessing a sharp decline, reaching their lowest level since 2010, affected by the inflation crisis in the American economy.
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High mortgage rates have caused home sales to decline for 11 consecutive months.
Rising mortgage rates and increasing inflation rates in the US economy have led to a sharp rise in house prices, which has led to a decline in consumer demand in the real estate market, and to a sharp slowdown in home sales.
Previously owned home sales fell 1.5% in December, compared to the previous month, to an annual rate of 4.02 million units, according to data released on Friday by the National Association of Realtors (NAR). On an annual basis, existing home sales decreased by 34% compared to December 2021.
This is the slowest pace of sales since November 2010, when the US was still in the throes of a housing crisis caused by defaults on mortgage debt.
NAR chief economist Lawrence Yoon said December was another difficult month for buyers, who are still facing limited inventory and high mortgage rates. He also expected sales to rebound soon, as mortgage rates dropped significantly following reaching their highest levels in late 2022.
According to reports, regarding 970,000 homes were offered for sale at the end of December, a decrease of 13.4% from November, but an increase of regarding 10.2% over last year.
The Federal Reserve’s plan to curb inflation and slow the economy has placed heavy burdens on the US real estate market, which is sensitively affected by the interest rate.
The US Federal Reserve has already raised the benchmark interest rate on federal funds seven times in a row in 2022, and has indicated that it is in the process of continuing to raise interest rates this year in its plan to confront inflation, which is still abnormally high.
Also read: The US Federal Reserve raises interest rates by 50 basis points
Rising interest rates put homeownership out of reach for millions of Americans, and prices are still higher than they were just a year ago. The average price of a home sold in December was $372,700, an increase of 2% over the same period a year earlier. This month marks the 130th consecutive year-on-year series of house price increases, the longest on record.
Also read: International Monetary Fund: America has not passed the risk of inflation yet
Jeffrey Roach, chief economist at LBL Financial, said that the real estate market has been reeling for years between price instability and high interest rates, explaining that as a result of a combination of these factors, housing affordability is the lowest since the mid-1980s.
